CES: The Real Cost of 4G

4G is going to allow carriers to permit their subscribers to download data at unprecedented wireless speeds. But what is that really going to translate to in terms of cost?
Written by Jason Perlow, Senior Contributing Writer


4G is going to allow carriers to permit their subscribers to download data at unprecedented wireless speeds. But what is that really going to translate to in terms of cost?

At CES 2011, ultra-powerful next-generation Android smartphones and tablets abound. And central to this seemingly all-Android orgy of a consumer electronics trade show are the 4G networks from Verizon, AT&T, Sprint and T-Mobile they are designed to run on.

If CES is an Android Orgy, then 4G is, well, the Ecstasy. Actually I had a more appropriate analogy for this, but I like keeping my job.

Also Read: When Netflix, iPhone Meets 4G Wireless Hell Breaks Loose

Sure, the idea of downloading mobile wireless data at speeds of anywhere between 2Mbps and 20Mbps a second on LTE, WiMAX and HSPA+ networks is arousing... intoxicating even.

We know that the technology works. It's fast. Very fast -- up to 12Mbps (Megabits per second) with bursts up to 20Mbps already being reported. If you compare it to current 3G technologies, which have a real-world throughput of around peaking to about 1Mbps, 4G's peak download speeds are about 10 times faster than what are in common use today. [Edited for clarity]

However, what we don't really know, and what none of the carriers at CES showing off super-advanced dual core, Android-based smartphones and Tablets will tell anyone yet is what the 4G smartphone and tablet data plans are really going to cost.

We can only go from the preliminary service rollouts that we've seen so far from Verizon, Sprint, Clearwire and T-Mobile.

The carrier that most people are going to benchmark against is Verizon's 3GPP Long Term Evolution (LTE) because they are going to have the most built-out network and also will have the fastest.

Their LTE network, which launched in early December of last year, currently supports Aircards, not smartphones. Right now, they are pricing 5GB and 10GB plans at $50 and $80 per month, respectively.But the user characteristics of business data transfer on Aircards are very different from consumer smartphones, and nobody really knows what Verizon is going to charge for smartphone data.

Sprint, which launched its 4G WiMAX network earlier in the spring of 2010, and already has smartphones using the service, such as the HTC EVO 4G, is currently offering "Unlimited" data with its various consumer connectivity plans.

However, as with its 3G network, Sprint 4G coverage is much more limited than Verizon's, and it is likely that the company will have to improve its infrastructure considerably in order to accommodate growth.

Additionally, Sprint will likely have to take on the additional burden of assimilating Clearwire, the operator of the financially-troubled CLEAR 4G WiMAX broadband network it has a majority shareholder position in and whose chairman and founder, Craig McCaw, resigned last week.

Also Read: Clear 4G WiMAX, Beats Crappy Hotel Internet

For Sprint customers, a takeover of Clearwire and infrastructure buildout needed to compete with the larger carriers is likely to translate to increased costs and a possible move to a metered-style plan, which would be more in alignment with what Verizon and AT&T (who plans to launch their own 4G network in Mid-2011and has of yet not offered any details regarding pricing) are likely to offer.

T-Mobile, which upgraded its HSPA network to 4G-capable speeds last year, is also offering "Unlimited" data plans similar to Sprint's. But as with Sprint, it will also require considerable infrastructure build-out to compete with the top two carriers, which is also likely to translate to increased cost handed down to the consumer.

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Obviously, as with 3G plans now, there will be heavy competition. As I alluded to in my previous article about the new FCC Open Internet Order, which excludes wireless carriers from most of the key Net Neutrality legislation, the wireless industry is going to become the Wild West, and the pricing of 4G will at some point become heavily commoditized. But in the formative years, it's going to get ugly.

As we have learned, with such high data rates, it is possible under certain conditions to completely eat up your entire 5GB monthly allotment in a matter of hours. When you've got a phone or a tablet that is capable of viewing and live-streaming high-definition video or downloading entire albums of music in a matter of minutes, as Stan Lee says, "With Great Power Comes Great Responsibility."A certain amount of end-user discipline is going to be required.

In the case of Verizon, overages on their LTE network are currently charged at $10 per Gigabyte. That means that if you eat your entire fill on a $50 per month 5GB plan towards the end of the month, and you need to eat more in the last few days, you get hit with a $10 charge even if you exceed it only by 100MB. Verizon currently doesn't pro-rate at smaller amounts, and there's no "Rollover" of unused data.

But let's say you're traveling on a business trip at the end of the month, you're at your hotel room, and you turn on wireless access point functionality on your new Droid LTE-whatever. You want to watch a Netflix movie or download it/stream it from iTunes on your iPad 2 that's tethering to it via Wi-Fi or has LTE built-in. "Oh look, they have TRON Legacy in HD!". It's only 2.5GB.

If you download or stream that, and you were 200MB short of your 5GB on the 29th of the month, you just ate a 3GB overage. Assuming that Verizon charges similar plan rates for their smartphones as they currently do for their LTE Aircards, that $5 iTunes movie rental just cost you $35.

Does that give you some pause? It should. Now think about what happens when you give an entire family of four a bunch of LTE Android smartphones.

Do you think your kids will even think twice about clicking on an embedded HD video on YouTube? Or when Verizon offers music videos and HD content through their own app portal?

With 3G, there was at least the issue of crappy performance and visual quality that prevented you from doing this -- you needed to be in a decent Wi-Fi coverage zone. But with 4G, nothing's going to stop you from chewing up that data, well, because you can. And there will be tons of apps and sites that will be enabled that will allow you to completely exploit that 4G connection.

Of course, Verizon and other carriers that will eventually have to move to metered, overage-based models are counting on the fact that you will become addicted to 4G and will eat the costs. But I'm betting the first time people get socked with $200 data bills because their teenagers went nuts with the download button it's going to be a very rude awakening indeed.

How much do you want to bet the most popular application on 4G LTE phones is going to be an on-screen Gigabyte ticker? Talk Back and Let Me know.

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